PBS has since slashed its budget by 21 percent, and the Corporation for Public Broadcasting (CPB) is winding down. Hardest hit by these cuts will be rural stations that rely on CPB funding to stay on the air. At least 70 rural stations rely on CPB money for 30 percent or more of their funding, while some rely on CPB for as much as 65 percent of their budget. 

Steven Bass, who stepped down as president of Oregon Public Broadcasting in 2024 after 19 years, calls public radio a “lifeline” for rural communities in his state—one that’s now in jeopardy. 

This transcript has been edited for length and clarity. Watch or listen to the full interview at iTunes, YouTube or Spotify.

Anne Kim: Steve, tell us a little bit more about Oregon Public Broadcasting and about its history—which is more than 100 years old! 

Steven Bass: OPB was started as a single radio station that went on the air in 1923 with the call sign KFDJ—now it's KOAC AM 550. It was at a time when public radio, or what we know now as public radio, was “educational radio,” and it was sprouting among land-grant universities primarily. The early days tended to be in places that were rural and agricultural. Oregon, Iowa, Ohio, Wisconsin had the earliest stations dating back to 1917. 

The Oregon station began as a physics department experiment, and it broadcast from the physics building [at what’s now Oregon State University].  When I got to OPB in 2006, we were still operating in the original studio from the 1920s. We eventually had to shut it down because equipment became more computerized, and the studio had no air conditioning. 

I remember the host would have to open up the single-pane window to keep the equipment cool, and it would be really bad when the marching band was going by, which would happen occasionally. 

Anne Kim: What does OPB look like now, and whom do you reach? 

Steven Bass: OPB operates a network of about 17 AM and FM stations scattered around the state. Our coverage extends from the Portland metro area all the way east to Idaho, all the way south to Nevada, and to west side of the Cascade Mountains to Eugene and Cottage Grove. There are five TV stations that serve the same area, and there are loads of little translators that rebroadcast the signal. It serves about 85 percent of Oregon's population, and the only place where OPB doesn't have broadcast coverage is in southern Oregon. 

But what I would say is that “service” isn't just about where you’re broadcasting but about where you’re reporting as well. I think the whole nature of what service means in a community has changed over the years from one that's just defined by where you broadcast.

Garrett Epps: Steve, let me tell you that just last month, my family and I had a sleepless night in Florence because we were waiting to hear whether the tsunami from the Russian volcanic eruption would cause flooding, and we would have to move quickly to higher ground. We were listening to KLCC, and I thought that as a KLCC listener, I'd ask you to talk a little bit about the role that public broadcasting plays in emergency communications in places even more rural than Florence.

Steven Bass: This is something that's gotten a lot of attention, and emergency alerting systems ride on the technical infrastructure of public broadcasting. The national-level emergency alert system comes through OPB and then gets distributed. 

What I think is even more critical is how public radio combines technology with boots on the ground. I'm thinking of what happened around Asheville, North Carolina after the hurricane, and Blue Ridge Public Radio was there. They had a resilient old technology called FM radio that you can get with a hand crank radio, or in your car or, if you're lucky enough to have internet service - which tends not to stick around when you're in those kinds of emergency situations – that you can stream on your phone. More importantly, they had the personnel there who could report on what's going on. This also happened with the flooding that occurred near San Antonio, and in Alaska, where the public radio station was reporting on the incoming tsunami. 

It's the part of public media that people kind of forget—that combination of a resilient technology that is able to reach people, plus people there to report it. In many communities, public media is the only institution that has any reporters that can do this because somebody who's 400 or 500 miles away is not going to understand the nature of the terrain, and they don't understand the community.

It’s going to be very unfortunate that with the loss of federal funding, many of these organizations, particularly in rural communities, are really going to be hard pressed to survive.

Garrett Epps: People don't necessarily realize how big the West is. Oregon is the ninth or 10th largest state in the United States. All the others that are larger are in the West, including Alaska. Oregon's about the size of the United Kingdom.  Can you talk about what is available to people in those rural areas and how much they use public radio as opposed to commercial radio?

Steve Bass: It varies by community, but I will say that when I was at OPB, we had the opportunity to extend our radio coverage, and people were very thankful for that service. 

And the beauty of public media is that it's available for free. It's not just that it's non-commercial. Anybody with a radio or a television can just turn it on and it's there. There's no gate, there's no paywall. 

And I think people use it quite a bit. I've traveled a lot around the state, and everywhere I go, I would find lots of fans of OPB. In June, I was in Pendleton, Oregon, which is about three and a half hours east of Portland. It's out in wheat country, and it’s a community of about 17,000 people. 

Everywhere I went, people were asking about what the impact of federal funding cuts was going to be on OPB because it's a lifeline service for people. 

We were looking at a small community in Oregon a little further out called Halfway where we had a tower that needed to be replaced, and it was going to cost about $150,000. It's a community of 288 people, and when I asked our membership people if we had any members there, 50 of the households in that community out of 288 were members. 

It's easy to say that the only people that care about public radio are in urban areas, but it's not true.

Anne Kim: OPB’s website says that it’s going to lose about $5 million in federal funding a year—or about 9 percent of its annual budget. What does that mean as far as the ability of OPB to deliver the services you’ve been talking about?

Steven Bass: Well, I'm not there, so I can't tell you precisely what the plan will be. But back in the day when I first started in public media and when I first started at OPB, the only predictable source of support was effectively what you got from CPB [Corporation for Public Broadcasting].

CPP would also pay out in a very predictable manner, which is somewhere around November or so, and you could count on getting a check for 75 percent of your grant, and then more later on in the year. So for those that were looking at how to manage their cash flow, that was an important infusion. 

As we look forward, I think that for organizations like OPB that are financially strong, they are likely to figure out some way to handle this. It's going to hurt – nine percent is a significant number. But compared to many other organizations where you're talking about 20 percent or 40 percent—and in the case of a tribal station in Eastern Oregon where 99 percent of their funding comes from CBP—there's no way to make up for that. 

But federal funding is only among the challenges that public media faces now – it’s not the sole challenge. And in some cases, it may not be the biggest challenge because what we are seeing is a fundamental reordering of the media ecosystem with more people turning to on-demand media. This is particularly true in the television business where in the month of May, streaming and on-demand viewing eclipsed all linear viewing. In other words, compared to all viewing on broadcast, cable, or satellite, there was more on Netflix, Roku, and YouTube TV. 

So if you're in the business of basically being a redistributor of broadcast content, you have a big shift you need to make. If you add those two challenges together, what's really going to be needed is a significant transformation throughout the ecosystem, and that’s where organizations like OPD are focusing right now.

Garrett Epps: One claim I've seen online is that a lot of smaller stations will switch to more NPR content because it's cheaper than having boots on the ground. Do you see that as a problem?

Steven Bass: Well, I see it as an economic solution, but what I fear is that it is not a long-term strategy because you’re rebroadcasting content that people can now get online. How long is that going to hold up?

The thing that is truly unique is the reporting that is being done on the ground, so I think that's the shift that needs to happen. What organizations may need to think about is how to make this shift with no federal funding. It is not going to be easy.

Anne Kim: I want to go back to what you're talking about on the journalism and reporting, because I know that that was a priority for you in your tenure as president of OBP.  You grew the journalism staff substantially and your newsroom has covered some amazing stories, including some groundbreaking reporting about the decline of salmon in the state, problems with the foster care system, groundwater contamination by a mining company, and other major scoops.  How do you go about preserving this sort of hard-hitting public service journalism that OPB has pursued for so long?

Steves Bass: You know, that's a really great question. Because I know my successor really well, and I know what her values are, I expect that's going to continue at OPB. I think that OPB has seen this as a very important part of its future in terms of its public service. 

When I came to OPB in 2006, I thought I was being hired to run a television and a radio network. I did not think that within a period of about five years, we would be on a path to becoming a primary news source. We’re the only statewide news organization left in Oregon. 

Garrett Epps: What is the long-term solution? Have you got one for us?

Steven Bass: There is no one-size-fits-all solution, nor one that is going to work in some of the most remote and rural organizations. I Iook at the state of Alaska, where public radio in particular is a lifeline, and many of these organizations are going to lose 50 percent or more of their funding.

The only thing I can think of that would allow them to continue doing what they're doing now is if the state of Alaska stepped in and said they’ll pick up a larger share. But Alaska has long ago defunded public broadcasting. 

In1986, when I was working for PBS, I was sent up to Alaska to work with all of the public broadcasting stations because they had been defunded by the state. People in rural communities didn't have money to give the station, but they had just gotten a whole bunch of salmon. So they put them on ice and brought them down to the station as their gift. It was a remarkable thing, but I don't see an easy solution for those organizations.

In other places, I think we're going to see more consolidation and common backroom operations. My view is that we really need to increase the number of boots on the grounds in all kinds of communities and not to put that at risk. If you don't have duplicative infrastructure in all of these places, that's probably a fair price to pay. 

And then of course, I think the public is going to step up a bit more. I know that OPD and other organizations have seen a nice bump in fundraising as a result of this, and that's important. But the question is whether that’s a long-term amount of support or in the short-term? My hope is that it's going to be long-term in nature.

Garrett Epps: What can ordinary listeners do beyond writing checks to try to help their local public radio organizations? What would be constructive and what would not?

Steve Bass: Writing checks or becoming a sustaining donor if you can do it certainly helps. I think that in some cases, public media organizations need expertise on their boards of directors. If people have some sort of specific expertise, volunteering your time and energy is a good way to get involved. 

And I think the other thing people can do is just spread the word. The brand of public radio is not the same as NPR, but it’s been kind of mushed together. I think that there needs to be some rehabilitation of that brand, if you will, because for many people who don't listen all the time or at all, they have no idea what to think. I think if people are out there saying, you know, really, there's a lot of good stuff on your local public radio station, you should really check it out online or on the air, that would help.

Subscribe on iTunes, YouTube or Spotify.

But the election of Donald Trump has led to a peculiar phenomenon: the “Californi-fication” of Texas and the adoption of California-style tactics to impose a right-wing agenda. In this episode of the Washington Monthly podcast, journalist Christopher Hooks discusses his recent article for Texas Monthly chronicling this shift. 

This transcript has been edited for length and clarity. 

Anne Kim: Your article in Texas Monthly argues that Texas—the so-called “Lone Star” State, the beacon of small government conservatism, and the number one hater of nanny-state California—has actually become more like California than California itself. Can you explain the thesis of your piece?

Christopher Hooks: If you really want to step back, the big picture for Republicans in Texas is that there have been three stages as they've taken power.

First, when Texas was briefly a two-party state transitioning from Democratic to Republican dominance, Republicans played very nice. They emphasized their bipartisan credentials. There was a big part of the party that was pro-choice in the 1990s. It's easy to forget now. George W. Bush, who was the governor, worked with Democrats in the legislature and emphasized that he was a “compassionate conservative.” 

And that lasted until 2002 or 2003 when Republicans took control of the Texas House and solidified their dominance. And all of a sudden they didn't have a general election to worry about. They didn't really need to be chasing independent voters for the most part. And a lot of the bipartisanship went away, but the party was dominated by figures who had been conservative Democrats earlier in their life, among them Rick Perry. And they were emphasizing a kind of political tradition which was familiar to a lot of Texans. It emphasized economic development. It emphasized doing away with regulation in favor of small government. And in that period of time, the bête-noir for Texas—which they really loved to hate and talk about—was California. California was the nanny state. California tried to control what its people did, and it used its market power to control what other Americans did. 

It set rules like the CAFE standards and warnings about cancer and these other things that forced companies to comply with California law across the United States. And Texas set apart itself apart from that. It liked to judge how well Texas was doing by how many Californians were moving to Texas. 

And I think it may be too early to put an end date on that stage. But sometime in the last 10 years, coinciding with Trump taking over the national level, there has been kind of a generational change in the Texas Republican Party where they don't really come from the conservative Democratic tradition. They're much more eager to use the state to crack down on their enemies, to control what Texans do, and to do this California-style thing where they set laws in Texas that compel companies—whether they're banks in the Northeast or tech companies in California or food producers in the Midwest—to follow Texas law across the country. 

And having covered Texas politics for the last 15 years or so, it's remarkable. The legislature is now passing a lot of laws that would not have even been considered 10 years ago.

Anne Kim: You have this really striking passage in your piece where you write, “The new generation of Republicans doesn't want to be the negation of California so much as a conservative version of it.”  So I want to ask about three phenomena in particular that you write about that had their origins in California but that Texans have embraced in their own Texan kind of way: Number one, suing people; number two, the nanny state warning labels you talked about; and three, embracing Hollywood.

So let's take each of those in turn, beginning with the lawsuits. You write that traditionally conservative Texans didn't like trial lawyers and so-called “frivolous” litigation, but these new conservative Texans really love lawsuits. Can you explain what's going on here?

Christopher Hooks: Well, you might not be able to judge from the name, but this group called Texans for Lawsuit Reform is one of the biggest and most important Republican organizations in Texas. They were formed in the ‘90s, and they became a really big part of how the Republican coalition ran and financed candidates and organized itself. And the big achievement of the early Republican years in Texas was tort reform. 

Texas was a very good state to be a trial lawyer—arguably sometimes too good. And what exacerbated Republicans’ feeling about this was that those trial lawyers were often turning around and giving their money to Democratic candidates. So there was a big effort that lasted for 10 years to make Texas a very hard state to sue in. And that was part of the religion of the Republican coalition for many years. When Republicans were contrasting Texas and California, they would always point to the fact that California is a very good state to be a trial lawyer, which they said was an impediment on business and economic activity. 

What changed in Texas is SB8, the abortion law from a few years back. It was passed before Dobbs(the Supreme Court decision overturning Roe v. Wade), and they felt like they needed a novel legal mechanism to enforce an abortion prohibition. What they came up with was this “bounty hunter” provision—the idea that you could sue somebody who facilitated an abortion even if you were not party to it or had any connection to what was actually going on.

At the time this was seen as kind of a freakish legal provision, which would surely be struck down in the courts, but it wasn't. And then what you saw was lawmakers turning to their pet issues and realizing, “I can attach a bounty hunter provision to this,” or “I can create a new way to sue somebody.”  

In this recent session, which concluded in June, there were over a thousand bills filed in the legislature that created a new way to sue somebody or for the Attorney General to fine somebody. And they were for very strange issues. I think my favorite was a bill that gave the Attorney General the authority to pursue a half million dollar fine for any museum that contained “obscene” material, like a nude or something. But lawmakers really took to this idea that they could use private lawsuits as a way of social control. And it marks a real break from what Republicans thought about the proper role of government.

Anne Kim: I want to turn to another means of social control, and that's over people's diets—not just in Texas, it turns out, but nationally. You write that Texas has gone full MAHA, and they're outdoing RFK Jr. on the food labeling issue. In particular, there's newly passed legislation that would slap warning labels on foods containing one of 44 different ingredients, and that's going to include everything from M&Ms to Doritos to granola bars. Can you explain a little bit more about this legislation and how it's going to affect the rest of us nationwide?

Christopher Hooks: This was something I did not see coming a year or two ago. If you buy a bag of Doritos in the state after this fall, it will come with a little warning label on the back of it that says this product contains ingredients that have been flagged or not approved by the regulators of the European Union, of Canada, Australia.

And everything about this as a long time watcher of Texas politics was strange. It was strange that Republicans in the legislature were farming out their authority to the European Union, which, for example, bans Texas beef that has been given growth hormones. 

But this also struck me as a very California thing to do. California has a lot of labeling requirements, and people may be familiar with the Proposition 65 warning label that says a Hostess Twinkie contains ingredients known to cause cancer. And 10 or 15 years ago, this would have been seen as the most extreme manifestation of the “nanny state.”

But the Texas bill had wide Republican buy-in and was passed by bipartisan majority in the legislature. Democrats voted for it too. And Robert F. Kennedy Jr. seemed to see it as a big part of his agenda. He lauded this and worked with the drafters of this bill, and he is using it as a  backdoor way to ensure that these warnings are everywhere in the country because food producers who sell products in Texas will need to put these warning labels on everything they sell throughout the country.

Anne Kim: And they'll have to do that because the Texas market is so big, like the California market is so big, that they really don't want to have to create two separate labels, one for Texas and then one for the rest of the country. It's just not practical from a cost standpoint.

Christopher Hooks: Yes, absolutely. I don't think anyone has a real view of whether the ingredients that have been included in this list are bad for you or not. But the mechanism of this law is an innovation and it represents, again, a kind of change in how Texas Republicans think government is supposed to work.

Anne Kim: Let's turn to the third way in which Texas has embraced a California mechanism, if not necessarily in the same way that California has done, and that's embracing Hollywood. You write about some very large new incentives that Texas is offering to people if they make their movies in Texas. However, it seems that there are some pretty big caveats attached to all this funding that Texas is doling out to movie producers.

Christopher Hooks: Texas, like most states, has had a film incentive program for many years, and they've tried to encourage the production of films here since the ‘70s. The film incentive program has sort of been an elite project here in the sense that they tried not to talk about it. And they tried to not do a large amount of money every year because it was somewhat controversial. There are a lot of conservatives who said that we should not be funding film production. We should not be funding Hollywood.

What's changed in the last few years is that the amount of money that Texas has been allocating to film incentives has spiked dramatically. At one point the legislature was proposing spending $500 million every two years on film incentives. They cut that back a little bit, but at a time when Hollywood is squeezed because of AI and the streaming revolution, this is a huge pot of money.

And there are some visible strings and some invisible strings attached to this. The visible string is the “Texas Heritage Film Incentive Program.” The Heritage Film Program is supposed to incentivize the production of TV and movies that promote “family values” and “Texas values,” and those are decided by the agency which is controlled by the governor. So he decides what “Texas values” are to promote a positive vision of Texas. 

I suspect in reality that a lot of what’s going to come out of this program will not be very good and won't have major impact on American cultural discourse. But it is a little eyebrow-raising to think of Greg Abbott having a little pot of money to produce movies that have a message that he likes about Texas. 

The invisible string, which I think is more important, is that there have already been some fights between the legislature and film producers about content that they think is politically objectionable. Some years ago, a director named Robert Rodriguez produced a movie called Machete, which got Texas incentives, and it had Danny Trejo and it was kind of like a Chicano grindhouse movie. I actually haven't seen it. But the legislature thought that it had a racially and politically poisonous message and that it had a bad message about Texas. And so they clawed back the film incentives, which was a major hit to the producers.

In the future, if you're making a movie in Texas, the business of film production being what it is, you are going to think carefully about whether there is something in this movie that the Texas legislature is not going to like because they're very loud about their opinions. And maybe in the future, you shy away from making a movie that is negative about Texas or is likely to get unwanted attention.

Anne Kim: How are Texans feeling about all of this? And where do you see all this headed? Are the legislature and the governor going to continue to ratchet up these kinds of social controls or is there an endpoint?

Christopher Hooks: Texas for many years has been a state where 40-45 percent regularly vote Democratic, and sometimes it gets closer. They've been very mad for a long time, and they're going to stay very mad. I think what folks here are looking at more closely is the question of whether the business groups splinter from what they see the Republican Party doing. What are the Republicans who gave money to Texans for Lawsuit Reform doing now that their political project is falling apart?

This is something I ask people whenever I can. And my sense is that they're nowhere close from splintering and saying, “Well, can we make the Democratic Party the pro-business party?”—which would be a significant shift.

As for voters, the Texas economy is doing very well. And there are a lot of things to be said in favor of the Texas model—relatively cheap housing, a lot of people coming into the state. I think to see a really pronounced political shift in Texas, you would need to see a very deep recession of some kind. 

But there is a possibility that there is kind of an invisible tipping point where the right-wing faction of the Republican Party goes too far. It's just hard to predict what that would be.

Anne Kim: What does the Texas example tell you about the national Republican Party and how its philosophy is evolving over time? You say this all happened as Trump came into power, but which is the dog and which is the tail? 

Christopher Hooks: Trump was an interesting thing to watch from Texas because he did seem very out of step with what Texas conservatism had been, and Texas obviously had a very long-standing and deeply entrenched conservative tradition. 

And this idea that we're going to replace international trade with autarkic manufacturing, that's not something that Texas does or has ever done. Texas has a little bit of manufacturing, but it depends on Canadian and Mexican trade flows and always have. And Texas also depends on cheap labor. So this idea of sweeping immigration enforcement and deporting everybody is very bad for Texas.

So it is possible that there is a tipping point coming. But as a longtime observer here, I’ll believe it when I see it, I guess.

Anne Kim: Is there any chance that the tipping point is the redistricting mess that's going on right now in Texas?

Christopher Hooks: Well, it's interesting. Republicans should remember the example of 2006 and 2008 when George W. Bush was very unpopular, and the Democrats made big gains here. And also, of course, 2018, when Beto O'Rourke came within two and a half points of beating Ted Cruz, which would have been not the end of the Republican Party but a very significant blow. We'll have to see.

They’re clearly doing this because Trump wants them to. It's not clear that it's in the interest of Texas. But we have not yet seen the really big blowback that Democrats here would hope for. But over the next year and a half, who knows what that holds for the country and for the state?

Anne Kim: It looks like this is a one-way ratchet unless one of two things happen: One, there's a blowout in 2026 of the GOP, and that forces a rethinking of all the strategies that are happening right now; or two, the economy craters, and the Trump economic plan really doesn't work out for Texas. It sounds like those might be the two things that could cause a reversal of some of this heavy-handedness from the Texas government at the moment. Does that sound about right or is there another possibility for how things could shift back in the state?

Christopher Hooks: No, I think that's generally right. You're looking for some kind of a national collapse of the Republican Party. And Texas is so integrated into the North American economy and the global economy that I think the tariffs, if they ever really go into effect in a meaningful way here, have the potential to really hurt people here and hurt powerful and interested parties. 

Texas is a free trade, cheap labor state, and Trump is attacking the two pillars of the Texas economy in a way that is strange. It's strange to see the Republican president doing this to his richest base state. And at the same time, you know, it has been pointed out to me that he has offered a lot of policies that are very favorable to California companies—tech companies and banks and this crypto “strategic reserve,” which shows a level of consideration for a very screwed-up industry that no Texas industry has gotten. Privately, people in industry are talking about this, but it has not come to the level of a public break with the president. It would have to get a lot worse for that to happen.

Anne Kim: Very interesting. Thank you, Chris. Really appreciate your insights, and look forward to talking to you again in the future.

Columbia University recently agreed to a $200 million settlement with the Trump Administration, while Brown University has agreed to a $50 million deal. Harvard was reputedly considering a settlement of up to $500 million, although that figure has since been disputed. Alumni may be chagrined, but financial realities are forcing many colleges to come to the table, says Robert Kelchen, professor and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville.

This transcript has been edited for length and clarity.

Anne Kim:

Why are schools feeling compelled to make these deals? 

Robert Kelchen:

Well, the Ivy League institutions have a lot of federal funding from research, and they're hoping to get some of that back to the extent the administration continues any type of research funding in the future. 

But there is a divide on campus and among alumni and board members about what to do. Some people want to take this all the way to the Supreme Court. Others, especially among faculty in the sciences, think that though this might be the right thing to do, it would absolutely devastate their life's work and research. So they're hoping they can salvage their own work by doing a settlement. There are also some people who think that a modest settlement now will save them money later because it seems like the administration wants to up the ante with new institutions. 

I think all of those reasons really could justify at least thinking about a settlement. But the question is, will you get your money back and will there be pressure to settle again a few months down the road?

Anne Kim:

Now say that Harvard does decide to hold out. Realistically, how long can Harvard maintain the status quo given its current financial resources? They’re potentially losing $9 billion in federal funding, plus the loss of international students. They have a $53 billion endowment, but the government has limitless resources.

Robert Kelchen:

It's tricky for Harvard to hold out for a long time, especially given that out of their $53 billion endowment, only about $10 billion is unrestricted. They could borrow money from the capital markets to get through, and out of that $9 billion in federal funds, some of that is through affiliated hospitals that doesn't go directly to the university.

But basically, if they were to try to fight this for years, all their unrestricted money would go away over the next several years, even after making cuts. And for an institution that wants to keep growing and thriving, it's more difficult to do that without having enough unrestricted funds. So they can do it. The challenge is: Are they willing to take that large of a financial hit, or are they trying to save as much of their position as possible, realizing that conditions may be difficult for years to come.

Anne Kim:

I want to ask about some financial pressures not limited to Harvard but could apply to a broader set of schools. One of these is the endowment tax included in the One Big Beautiful Bill Act. Mark Schneider at the American Enterprise Institute has created a chart revealing these really stunning figures that universities are going to have to fork over in just the next five years. Harvard, think, has to pay about $2 billion, Yale, $1.5 billion, Notre Dame, $690 million.

What is the impact of this measure going to be on elite schools that are particularly targeted but schools more broadly?

Robert Kelchen:

The endowment tax still affects a pretty small slice of American higher education, but it's a hit on resources at a time where institutions are having to make some difficult financial decisions. But ultimately, the bigger concern over the next several years may not be an endowment tax of up to 8 percent because that tax is only on their income. It could be everything else crazy going on with the economy that could reduce endowment earnings, period. But it's just another area of financial uncertainty where basically every part of university budgets is under stress right now.

Anne Kim:

And I want to ask about the international student picture too, because that's another area where Trump seems to be really turning the screws. There is a new analysis from the Association of International Educators, NAFSA, predicting that international enrollment in US colleges could drop by as much as 150,000 students this fall alone – which is a 30 percent to 40 percent decline in new international students this year.  What's the financial impact of that going to be? And again, this is not just about Harvard. International students are everywhere, right?

Robert Kelchen:

We have international students here in Tennessee as well. And we're not sure how many students are going to be here in the fall because getting visa appointments has been extremely difficult. We don't really know what's going on with that social media screening that they're doing. And then also if students have options in multiple countries, are they considering the U.S.? 

A one year drop of 30-to-40 percent of international students is painful, but if we end up with a permanent 30-to-40 percent reduction in international students, then that really starts hitting some institutions' bottom lines and also really affects both undergraduate and graduate education. International students make up a larger share of grad students, and they're also teaching classes while they're here too.

Anne Kim:

What options do universities have for making up some of this revenue?

Robert Kelchen:

The two best options they have are trying to increase fundraising and trying to increase enrollment of American students. And there are signs that some of the big research universities are going deeper into their wait lists this fall to try to get more American students to make up for the expected loss of international students. And then they in turn are taking students from the more regionally focused public and private institutions. So this effect is cascading down higher education food chain. But given when they're happening at this point in the spring and summer, the ability to adjust is somewhat limited, which means that colleges are going to be taking budget hits this year.

Anne Kim:

So all of this is leading me to believe that we should not be surprised if Harvard comes to the table and settles for some amount of money - principles might have to be sacrificed to pragmatism in these kinds of circumstances. Is that what you're expecting from a lot of these schools? Is everyone going to have to come to the table at some point because of all of these pressures you're talking about?

Robert Kelchen:

They're going to be asked to come to the table, and this is going to go well beyond the Ivies. I could see over the course of the next few years that I could see the administration trying to get money from a couple hundred colleges. 

But in terms of having to come to the table, some would rather come to the table than make really difficult financial decisions, while others may say that our autonomy as an institution is more important.

And then the Trump administration on the other hand, is likely to up the ante if you don't settle. They are going to try to get a higher price out of you and try to freeze every source of federal funding that they can find potentially up to and including financial aid for students.

Anne Kim:

In fact, that is what may be happening with Harvard because the number that was bandied about for a while was $500 million, but then Harvard denied that that was the number and said it was a White House leak. But that's 10 times more than what Brown settled for. 

Robert Kelchen:

And it's two and a half times more than Columbia as well. 

But it's clear the administration really wants Harvard - in part because Harvard is the name “Harvard” and also because Harvard has shown that they're willing to fight back to some extent. And that's not the behavior the Trump administration wants. They want institutions to roll over. And they seem very willing to increase the price for not complying.

Anne Kim:

Do we have any idea what the Trump administration is going to do with the money that it's collecting from these institutions?

Robert Kelchen:

That is a great question. We have absolutely no idea where the money is going. The president has talked about wanting to redirect money from Harvard to trade schools, so I'm not expecting a big boost to community colleges. I think it's going to go to some other mysterious project. Maybe it helps pay for Air Force One. A slush fund of this kind is rather unusual and we're not sure what's going to happen.

Anne Kim:

Right, and we no longer have a Department of Education to administer said slush fund, which complicates things even more.

But I do wonder if the money is actually the point. The University of Pennsylvania was one of the very first of the Ivies to settle and there wasn't actually any money involved - they simply agreed to ban transgender athletes. Brown and Columbia have both agreed to some pretty major restrictions on various operational issues at their universities that have nothing to do with finances.

Robert Kelchen:

Brown is settling by paying workforce development nonprofits $50 million over 10 years. The White House isn't getting anything, but they're getting some control over institutional operations. And for Columbia, there's a provision in there saying that Columbia will work to enroll fewer international students. So Columbia got hit with both a financial penalty and some substantial restrictions and operations, even though Columbia is trying to spin it as we keep our autonomy.

Anne Kim:

What's happening with all of this makes me think that the relationship between higher education and the federal government is changing in perhaps irreparable ways. And you had a recent post on your website pointing out that the job of the university president is now very much a political appointment. So I wonder if you could talk a little bit about where you see the higher ed-government relationship going in the future.

Robert Kelchen:

We had a delightful era since roughly World War II where higher education was relatively apolitical and enjoyed a fair amount of support across the political aisle. Now we're seeing higher ed used more as a partisan tool or in some cases, such as in Florida, a spoils system where this is the retirement home for former politicians.

And for Republicans, they saw that the congressional hearings against the Ivy league presidents a couple of years ago were massively successful with respect to their base, and that means they're going to continue going after higher education. And now in a number of conservative States, the state governor or attorney general is teaming up with the Trump administration to try to make significant policy changes, such as ending in-state tuition for undocumented students, or even trying to throw out university presidents as successfully happened at the University of Virginia. I also really wonder who in the world would want a job as a university president right now? It's just a brutal job.

And part of what's driving some of these investigations as well is personal grudges by a number of key administration officials. One of the reasons why Duke is in the crosshairs over something in their student law journal is that Stephen Miller went to Duke, and he's got connections there, and he's not happy with the way things are going.

Part of the reason why Trump has been focused on the Ivy league is that's where he got his education. And then we see complaints against seemingly random institutions that come in because someone knows somebody who made a complaint or they saw a complaint come up on TV. It's just whatever gets on their radar, they're going there first.

Anne Kim:

So what do you think Trump's end game is on all of this? Is there anything that's going to make him happy, short of the utter destruction of American higher education? Does he have a vision for what he wants you think? Or is it really just about the retribution?

Robert Kelchen:

At this point, the goal seems to be to make higher ed fully under him in a way that the federal government historically has not done because we've had decentralized higher education. And we've been very proud of things like academic freedom and religious freedom in higher education institutions. But under the Trump administration, the focus is bringing elite higher education to heel. 

And I think the only way that really changes is if that suddenly becomes politically unpopular. And if you're attacking the Ivies, it's difficult for the average member of the public to sympathize as much. But if it starts going broader than that into a lot of the big state universities, then that may be where you start seeing more pushback. 

And we've even seen with the congressional hearings, as they kind of ran out of Ivy league presidents and started going elsewhere, public attention to those hearings has pretty much fizzled out. For someone who really wants to control that news cycle, the goal is to try to hit, hit, hit right now, especially when the administration is desperately trying to change the national attention from the Jeffrey Epstein scandal.

Anne Kim:

Right!  Well, one final question for you is any advice you might have for university presidents out there who may not be in the crosshairs right now. Is there anything that you would recommend that they do?

Robert Kelchen:

The first piece of advice is to assume you will be in the crosshairs at some point, whether it's because you have money or there's some student complaint or someone's videotaping a class and a professor says something that gets on Fox News. So plan for being in the public eye. What is your strategy to try to respond? And does that strategy have any chance of success? 

And if you're at a red state public university, and the administration decides to come after you, the state's probably also going to join in. And that's where my advice to institutional leadership is try to get a really good severance package. I hate to say it that way, but it is very difficult for leaders to survive in this type of situation when there have been numerous successes in getting rid of leadership.

Anne Kim:

Thank you, Robert. It's always a pleasure to talk to you and hopefully the next time we talk to you there will be some more positive news. Take care. 

So far, Trump has only managed to secure a handful of loose agreements with few details (including, most, recently, with the EU), while US businesses have been reeling. General Motors, for instance, reported a $1.1 billion loss last quarter because of tariffs. 

But the greatest damage to the country will be long-term, argues trade policy expert William Reinsch. The United States has lost its reputation as a reliable trading partner, Reinsch says, and countries around the world are now forging new alliances that exclude America. As a result, the talent and innovation that America once drew will go elsewhere. Persuading Americans to reject their current isolationism will require new domestic policies—such as dramatic investments in workforce development—that acknowledge the acute impacts of trade on specific sectors and workers.

Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS). He is also the host of the CSIS podcast, The Trade Guys.

This transcript has been edited for length and clarity. Watch or listen to the full interview on YouTube, Spotify and iTunes. 

Anne Kim:

Bill, you are one of the nation's foremost experts on trade, and you have served in some very senior roles over the last several decades. You served for 15 years as president of the National Foreign Trade Council. You were undersecretary of commerce for the Clinton administration. You're a professor of trade policy at the University of Maryland. You’ve really seen it all—except maybe what's happening under Trump. So because you've seen this long arc of trade policy over the decades, I would like you to weigh in on whether we are witnessing, in your opinion, the end of a post-World War II consensus on trade, or is Trump an aberration?

William Reinsch: 

Well, I think  neither actually. I'm sort of in the minority on these things. He's probably not a one-off. In fact, if you look at recent history, the Biden Administration had a number of similarities with the Trump Administration. They kind of ended up in a similar place, although they got there for very different reasons. 

For Biden, the trading system wasn't working because it was benefiting big companies and CEOs and not workers. For Trump, the trading system's not working because it's helping the foreigners and hurting us. So if you think about it—it’s the same crime but different villains, and it leads them to not that different a place. 

Is the consensus eroding? In some ways, yes, forcibly, because what Trump is doing most significantly to the last 70 years of trade rules is he's getting rid of “most favored nation”—the idea that a concession given to one needs to be given to all— and he's making deals that are specific. So when the UK, for example, gave up the ethanol tax, they did it for us. They did not do it for Brazil, which is a major ethanol exporter as well. Under World Trade Organization rules, if they're to do it for one, they need to do it for everybody. And so that was eroded anyway, but I think Trump's put the final nail in the coffin. 

But the reason why I don't think it's the end of the line for the system is that while Trump is withdrawing from the system and forcing other countries to have relationships with us that are different from their relationships with everybody else, if you look at the rest of the world, they're moving on without us. There has been a significant growth in trade deals that don't include the United States. So the UK just finished a deal with India. The EU is starting one with India. The EU is trying to finish off Mercosur, which is its deal with poor Latin American countries. Canada is beginning negotiations with a number of Southeast Asian countries. Turkey and the UAE have begun negotiations. The successor to the trans-Pacific Partnership, the Comprehensive and Progressive Trans-Pacific Partnership, CPTPP, has a lengthening list of applicants to join. The UK joined. They're negotiating with Costa Rica right now. China wants to join. Taiwan wants to join. Uruguay wants to join. 

So there's a lot of activity out there. They’re not all going to get across the finish line, but the thing about what's going on is it's surprisingly conventional. These are market access agreements. These are tariff lowering agreements. These are trade liberalization agreements. The same thing that we've been doing for the last 40 years, they're just doing it without us. That leaves us on the sidewalk just watching.

What Trump has said is the United States is no longer a reliable partner. So when you hear that, the obvious thing to do is find other partners. And that's what everybody's doing.

Anne Kim:

How has Trump changed what it means to have a trade “deal”?  And what I'm hearing you saying is that maybe in terms of the U.S., what it means to have a trade “deal” has changed, but for everyone else, it hasn't. And so we're running kind of a parallel system here with people having to deal with the U.S. on one hand and then the rest of the global economy operating as it has been. Am I interpreting what you're saying correctly?

William Reinsch: 

Yeah, I think that's right. The other element is if you dig into the deals that he's negotiating, there's not really as much there as he says. I mean, the dirty little secret here is that for Trump, the squeeze is more important than the juice.

Anne Kim:

“A framework of a concept of a deal,” right?

William Reinsch: 

It’s about the act of “winning”—being able to wave the piece of paper around the Oval Office press conference and say, “We won, I made the deal.” And you notice the most recent two with Vietnam and Indonesia were very much in that mode. He said, I talked to their president and I made the deal. And it's a brilliant political strategy because he doesn't reveal any details of the deal and they don't provide a text, at least not right away.

They still haven't made either Vietnamese or China or Indonesian text public. There's only one that's been made public, and by the time they do make it public and you have a chance to analyze it, nobody's paying attention because they've moved on to the next one.

But if you look at the UK deal, it's a framework. It's about 80 percent aspirational and about 20 percent tangible. They made a couple concessions like on ethanol, on beef. We made a couple on cars, maybe on steel—that one's still being negotiated—and on commercial aircraft. But most of the rest of it is we commit to having a further discussion about digital trade. We commit to having a further discussion about pharmaceuticals. We commit to giving you a better deal on steel and to resolve some national security issues that are outstanding. It's all kicking the can into the future. 

And if you look at the Vietnam agreement, which has not been made public, but if you take a peek at it, as I've been able to do, it's the same thing. It's commitments to talk more in the future. 

Nobody's seen the Indonesia deal, which is the latest one, but Trump said, we're going to get tariff free access for our stuff and they're going to pay 19 percent. Well, a couple of days later, an advisor to the Indonesian president had a press conference and basically said, it's not quite that simple. They are providing tariff-free access for American products that do not compete with Indonesian products and those products that are in short supply in Indonesia. That's very different from everything.

So it turns out that the deals, all of which are “great deals” and “big victories,” when you look into the fine print, there's a lot less there that meets the eye. So if you're another country, you've watched this.  And if you can figure out a way to let him “win” and let him win visibly, you might be able to do a deal that's not terrible and is less disruptive than you worried it was going to be. 

Basically, other countries are figuring out how to play him.

Anne Kim:

Now I'm wondering how hard you laughed when you heard Trump promise “90 deals in 90 days”! You’ve been on the inside of negotiating so many of these deals, but a lot of people haven't. So if you could spend half a minute walking through the actual process of what it takes to negotiate a real deal—the US Korea Trade Agreement or USMCA—it takes years, right?

William Reinsch: 

These things are multiple chapters with hundreds of pages, because you have to nail down every detail. For example, if we tell the UK, “OK, your steel can come in at 10 percent rather than the 50 percent we're charging everybody else,” that's the kind of statement that goes into a framework. But then it immediately raises the question: What steel are we talking about? Are we talking about, you know, basic shapes and sizes like sheet, strip and wire? Are we talking about products that contain steel? He put 50 percent tariffs on downstream products. Are they covered? What about specialty steel? Or stainless steel?  The stuff that goes into my hip, for example— that’s specialty steel. Is that covered?

Now it's digital, but negotiators used to show up with a big book because the United States has more than 10,000 tariff lines and you have to literally go through each one and decide what it's going to be. And when you get into non-tariff barriers, it gets even more complicated. We tell the EU that we want them to accept our health, safety and environmental standards, which we've been telling them for 40 years, but what does that mean? You have to go standard by standard, one by one and nail down in writing what they agree to accept and what they don't agree to accept. And it takes a long time. 

Anne Kim:

I want to ask one more question about the parallel trade negotiations that are going on without the United States. Trump is assuming that the world simply can't get along without the U.S. economy, and we are in fact the world's biggest economy and the world's biggest consumer. And he’s feeding the perception that it doesn't matter that everyone else is doing deals without us.

But that can't be right. What does it mean for our long-term competitiveness and economic stability if the rest of the world is globalizing without the United States in it?

William Reinsch: 

Good question. And in the long term it’s not good news. The Washington Post had a very thoughtful editorial exactly on this subject, and they made the case that American manufacturers are going to be forced to change their supply chains to something that's worse. 

If their supply chain managers right now are any good, they've already got best price, best quality, best delivery. So what Trump is doing is changing the economics of that - putting on different tariffs to different countries and forcing them to change.

The companies know two things. One, changing costs money. It doesn't matter what you're changing to, the act of changing costs money. You've got to sever contractual relationships with your existing people. You've got to find new ones. You've got to watch them. You've got to see if they can scale up, meet your quality demands. For a previous study on a different subject, we talked to auto manufacturers, and one of them told us it takes them seven years to certify a new supplier. So what you're going to get, even in the short term, is less choice because foreign producers are going to drop out of the market, or they're going to offer a narrower range of products.

And you're going to get more expensive products because the American companies are going to have to develop supply chains that are more expensive because you're going to be going to second-tier and third-tier suppliers and not their first-tier suppliers. So long-term, what it means for the U.S. consumer is less choice, inferior quality and higher prices. 

You describe the Trump view exactly correctly. He believes that our economy is so big and so attractive that other countries will pay to participate in it. And he may find out that they won't pay as much as he wants and that there are other markets and other economies. We're a slow growth economy. There are other economies, particularly in Asia, that are growing faster than we are. And it makes sense to turn your attention to areas that are lower-hanging fruit.

What it also means for the United States is it's going to leave us on the sidelines potentially on innovation. If he insists on reshoring manufacturing, it means that the source of our innovation in the future is going to be entirely here. So if somebody invents a better mousetrap somewhere else, we're going to miss out on it.

One of the great things that America has done for years has been its ability to absorb other people's ideas and other people's imagination and innovation, partly because they come here and stay here. And Trump is now busy deporting all of those people, which is another huge mistake. 

America “alone” is not necessarily going to be America “better than everybody else.” It's going to be America isolated and the rest of the world is going to move on not only economically, but technologically without us. And if you look at what the Chinese are doing, they're moving very fast in areas where they compete and in high tech areas where they compete directly with us, such as quantum computing, biotechnology, AI. There's a race on and the Trump assumption seems to be that we can do it all on our own. And historically, that's just not proved to be accurate.

Anne Kim:

Let's turn to tariffs. So one place where Trump has been “innovative,” for lack of a better word, is using tariffs for reasons other than for the protection of specific industries, like he did with steel in Trump 1.0. So the example I'm thinking of, of course, is Brazil, where he threatened them with 50 percent tariffs because of his sympathy for the former president, Jair Bolsonaro, who faces prison for plotting a coup after he lost an election. 

Has Trump set a precedent now for the use of tariffs that you think other presidents may use in the future or other world leaders may use in the future? And if it does become a precedent, what does that mean for the stability of the global trading system if you have leaders using tariffs as an economic weapon in this way?

William Reinsch: 

It's ironic, really, what Trump is doing is copying the Chinese. The Chinese have perfected the weaponization of trade. If you doubt that, talk to Norwegians, talk to the Lithuanians, talk to the Koreans, talk to the Australians, talk to the Taiwanese, ⁓ talk to the Mongolians, for that matter. When Norway gave the Nobel Peace Prize to Lu Xiaobo, the Chinese stopped buying Norwegian products. 

Trump is just taking the page from their book, and it pernicious. I mean, it's just a terrible precedent. It's just a terrible thing to do, and it's historically different, yes, from what we do. Although we do a lot of sanctioning, people tend to look at sanctions as sort of a different category. 

From the Brazilian point of view, they're a sovereign country, and this is for them a domestic issue. The guy allegedly attempted a coup. That's something that the Brazilian judicial system is dealing with. They don't welcome foreigners coming in and telling them what the verdict ought to be. And that's what this is. If we start going down that road, countries will start doing that to us, and there's no happy ending here. The Brazilians seem to be standing up and I think that's probably the right move for them right now. 

The irony of it is that it's been this great gift to President Lula, who was was slipping in the polls and this has united public support behind him. And meanwhile, Bolsonaro's son is here lobbying for more sanctions, which has allowed Lula to say the family is trying to torpedo his own economy. It's been a gift. 

And in Canada, the general opinion is that one of the biggest things that helped Carney win the Canadian election was Trump attacking Canada. His main opponent was Trump-like, and he sank straight down in the polls after Trump came in. I don't think Trump appreciates the extent to which what he's doing is counterproductive to his own interests.

Anne Kim:

Trump has certainly had a unifying effect – against him! The other question I had about tariffs was the impact on consumers. When Liberation Day happened, there were some pretty dire predictions from economists that consumers were going to start seeing these terrible impacts on their bottom line by summertime. The latest inflation report does have core inflation rising by 2.7 percent in June, but that's still not as much as some economists have feared. 

Companies might still have a stockpile they're working through, but what's your take on when you think we'll be seeing the full impact of tariffs, particularly if we have this 10 percent “baseline” tariff on everything? And how is that impact is going to be on consumers? 

William Reinsch: 

That's a good question. I think there are two reasons why the effect so far has not been as severe as predicted. One you mentioned, which is stockpiling, and it was major stockpiling. If you look at trade data for Q1 this year and Q4 last year, there were huge record numbers of imports. The other reason is that he hasn't entirely pulled the trigger. All those threatened April 2nd tariffs have not gone into effect. The worst has not arrived. 

I think that you're going to see it later in Q3 and also in Q4 as the stockpile inventory runs out. And if he keeps the August deadline – it isn’t “TACO Tuesday” again and he actually pulls the trigger, then you'll see prices start to rise. 

Now, the forecaster I talked to said even then it'll be less than you think. And he was approaching it from a macro perspective. He said, you know, if you look at what the tariffs are going to be on, 17 percent of the consumer price index is what’s affected. That doesn't move the needle as much as people think. 

But I also asked the forecaster about coffee because we don't grow any, except in Hawaii. All of our coffee is imported, and if the price has a 50 percent tariff or even a 10 percent tariff, aren't people going to notice? Well, if you go to Starbucks and get a $5.99 latte, maybe a dollar of that is the cost of the coffee. So your latte is going to go up a dime with a 10 percent tariff, or maybe 50 cents if it’s coffee from Brazil. 

Are people going to notice? Maybe. It's one of these things that will be variable. When you're going to buy a car and you discover that your $30,000 car is now $37,500, you're going to notice that, or your $50,000 SUV that’s now going to be $66,250 with a 20 percent tariff. 

Those are the kinds of things you notice. If you look at the entire macro-economy, it may not move the needle more than a few more tenths of a percentage points, but directionally, it'll be upwards. And I think it'll increase Trump's frustration.

Anne Kim:

I want to finish with another big picture question for you.  Trump is arguably a symptom of a larger problem and not a phenomenon onto himself because he has tapped into

a lot of frustration around the downsides of the impact of globalization and trade beginning with the late ‘70s through the ‘80s. And there has been pain. Trade causes winners and losers, and the Trump MAGA movement is built on that economic discontent. 

But if you're an advocate of global markets and the broader benefits that trade brings both to individual consumers and to economies at large, how do you recommend going about building a new consensus on trade that acknowledges and addresses some of these concerns so that we're not stuck in a “Trump 3.0” where we become even more isolationist and we become even more wary of opening our borders to new ideas and to new people?

William Reinsch: 

Well, hopefully the Constitution will prevent Trump 3.0, but we may get Vance 1.0, which will have the effect you're talking about. 

The big picture story of trade is that at the macro level, it produces gains for the whole economy. But you're right that at the micro level, there are winners and losers. And most governments—Denmark is probably a rare exception—do a very poor job of dealing with the victims, i.e. the losers of trade. 

I think one answer is to put trade in its proper place. Trump has a victimization narrative and he blames all of our problems on trade. If you dig into it and talk to people that are grumpy or unhappy, I think you'll discover it's a little bit different than that. It's easy to blame the foreigners, but what they're grumpy about is their station in life. They're grumpy that they're not doing better, and their children are grumpy because they don't see themselves doing better than their parents, which has been the history of the last 50 years. I'm concerned about whether my children will be able to do better than I've done. I hope so. I think so. They're on the right track, but we'll see. But a lot of people aren't. Household income between the late 1990s until a couple of years ago into the Biden years was essentially flat. So people don't feel better off. And people notice growing income inequality. The rich are getting richer, and the poor are getting poorer, and the rest of us are kind of stuck in the middle the way we've always been. A rising tide doesn't lift all boats, it lifts the yachts, but not the rowboats. 

But, you know, the irony of that is when John F. Kennedy said that he was talking about a tax cut. He wasn't talking about trade policy. And if you want to look at what's contributed to income stagnation and income inequality, I’d look at places other than trade. 

Look at tax policy and look at our regulatory policy going back to the Reagan administration. Look at our antitrust and competition policies, all of which have tended to favor the rich. And if you look at Trump 2.0, look at the “big, beautiful bill.” History is going to show that this is the biggest income transfer and wealth transfer from the poor to the rich in our history.

And that's not a trade issue. There's a lot that government can do to deal with these inequities that don't involve trade policy. And if we were doing a better job of lifting up the bottom decile of the economy, if we were doing a better job of trying to increase household incomes and workers' wages, I think a lot of this grumpiness in the economy would go away.

It's easier to blame the foreigners than it is to either blame yourself or a company. Democrats would blame the companies. Trump blames the foreigners. But, you know, the fault sometimes is not in our stars, but in ourselves. And there's a lot the government could do outside of trade that would make things different than they are.

Anne Kim:

Well, Bill, thank you very much for your time and for your insights and look forward to talking with you again.

The result, says economist Robert Shapiro, is that the United States economy has become dangerously unstable and vulnerable to financial shocks. Shapiro spoke with Senior Editor Anne Kim for the Washington Monthly podcast. This transcript has been edited for length and clarity.  

*** 

Anne Kim:  You were on the show a few months back, actually at the start of the Trump administration. And in fact, you were one of our very first guests, so thank you very much for returning! 

I want to ask you first about your most recent piece for the Monthly, titled Trump's Budget Could Break the Economy, which sounds pretty dire. And you conclude that “for once, the deficit hawks are right.” I take it that you haven’t always been one of those deficit hawks in the past, so what has changed in your mind? What is in the "One Big Beautiful Bill Act" that worries you so much? 

Robert Shapiro:  Deficits that are equivalent to 7% of GDP—that’s what bothers me. For some perspective, in the 1990s, the deficit averaged about 2% of GDP. From 2000 to 2007, it was 1.2% of GDP. Through Trump's first term, it averaged 3.6% of GDP.  

We are now at double the highest rate we've seen in a non—recessionary year in our history since World War II. The problem is that deficits have to be funded by somebody’s savings—they can’t be funded by consumption. American households save about 4 or 4.1% of their total disposable income. Businesses save through retained earnings, which is about 3% or 3.6%, I believe. All annual savings in the U.S. economy comes to 7.7% of GDP, and if the Treasury is claiming 7% of GDP, that means there’s nothing left for business investment, mortgages, car loans, or very little—and interest rates spike.  

However, we don’t only depend on domestic savings. We live in a global economy, and foreign governments and investors invest in our securities and our economy. 

Right now, foreign investors and governments own 33% of our national debt in Treasury securities. They also own 30% of all corporate debt and 27% of all U.S. stocks on all exchanges. So this is how dependent we are on foreign investors. 

It means we are totally dependent on foreign investors to fund business investment, car loans, mortgages, credit card debt—all debt. If those countries Trump is trying to punish with tariffs call his bluff, all they have to do is significantly slow their purchases. That will send interest rates across the board substantially higher, slowing the economy. 

And if they were to stop buying U.S. securities, the U.S. economy would crash because interest rates would skyrocket. That’s where we are. It’s just the numbers. This is not an interpretation. 

Anne Kim:  Can you explain why slowing sales or an outright stoppage of Treasury securities purchases will cause interest rates to spike? My understanding is that have to pay interest when people borrow money from us. And when people aren't buying, we have to continue raising interest rates in order to entice more people in with higher yields. Is that what's going on? 

Robert Shapiro:  Yes. That is exactly what will go on. If, say, China were to say, “We’re not going to buy any more Treasury securities this year,” then in order to attract other foreign investors, we’d have to raise interest rates to make it worth their while. 

There are other economic consequences —the value of the dollar, for instance. Normally when interest rates go up, the value of the dollar goes up. That has not happened. The value of the dollar has fallen 20% against the trade—weighted currency basket since Trump took office. 

That means foreign investors are losing interest—mainly in investing in corporate paper and stocks. We haven’t seen that fully in the stock market yet, though we did once. Japan, for about a week, said, “We’re not going to invest in the U.S.” in response to tariffs. The stock market lost thousands of points. 

This is not something you take risks with. We are talking about the fundamental stability of the U.S. economy. In the worst—case—but clearly plausible—scenario, we will have our third financial crisis in 18 years. 

Anne Kim:  I also read somewhere that the interest on the debt alone is more than what we spend on the U.S. military or the federal share of Medicaid. So it’s already an enormous amount of the federal budget and only going to get even bigger. 

Robert Shapiro:  We pay a trillion dollars a year in interest. And we find ourselves in a period where interest on the debt is compounding at a fast rate, because both the budget deficit and the interest are growing faster than the economy. 

Anne Kim:  And this is interest going to countries like China, Japan, the UK—whoever holds our debt. 

Robert Shapiro:  Yes. One—third of that interest is going abroad. We are sending over $300 billion in interest abroad—that's more than our trade deficit with China. 

Trump doesn’t understand how economies operate. He only wants to hear affirmation of what he already believes. That’s why respected economists and finance people are saying nonsense on TV about tariffs and inflation. 

The only thing that will correct this policy is when the costs become a huge political issue.  

The U.S. has always depended on the kindness of strangers to finance investment and deficits. Maybe foreign countries will give us slack because they don’t want to take enormous losses if the U.S. economy crashes. But Trump is attacking those countries politically and economically, so if they don’t give us slack, we pay a terrible price. The first casualty of spiking interest rates is employment and income. 

So this is not simply about what the yield curve shows. I think everybody is kind of living right now in a fool's paradise because the deficit hawks have always been wrong before. 

Anne Kim:  You mentioned the Fed, and I want to ask about that in a bit. But let’s turn to other threats to the economy. We’ve talked about the deficit, we’ve talked about the falling dollar. When you were on the show a few months back, you also talked about some inflationary pressures posed by the tariffs, but also Trump’s immigration policies. So what is your thinking now, six months into the administration? 

Robert Shapiro:  Well, we had seen inflation steadily move down—and it stopped moving down and has begun to move up. We have not seen the full brunt of the tariffs and inflation for two reasons. 

One is that lots of businesses stockpiled inventories. Half of our imports are inputs for U.S. manufacturing, and the other half are finished goods and services. You can’t stockpile services, but you can stockpile everything else. 

The other reason is that companies—large companies, particularly those dealing in big—ticket items like autos—have been reluctant to raise prices, despite high tariffs on cars and auto parts throughout this period. That’s because of TACO—that is, Trump always changing his mind—because he has gone back and forth so many times on tariffs. 

Companies like Ford or BMW that make cars in the U.S. have been reluctant to alienate customers by raising prices until they see the final lay of the land. But that’s running out. The inventories are running out. And it's become clear that we will have substantially higher tariffs. 

Before Trump, we had an average 2% tariff rate. We are now at 15 to 20%. 

Anne Kim:  Right. So for example, the latest so—called “agreement” with Japan sets a baseline of 15%, which the Trump administration is spinning as a victory. But the original tariff rate was a lot lower, right? 

Robert Shapiro:  Yes, the original tariff rate with Japan was about 3%. So it's five times higher. We haven’t seen the details yet. The largest—selling auto company in the United States is Toyota, and most of those cars are made in the U.S.—but with parts made in Mexico, Canada, Japan, and elsewhere. We don’t know yet what the new tariff rate will be on those parts. 

And this is not a “deal.” It’s an agreement to continue to negotiate. We haven’t seen the full impact yet. 

As for deportations—we are beginning to see increases in the cost of domestically produced fruits and vegetables. We’re also seeing this in construction. The largest number and share of undocumented immigrants is in construction. Second is personal services. Agriculture is actually fourth or fifth. Some people are being deported, but a lot of other people are staying away from jobs out of fear that ICE will find them. 

And it’s not just unauthorized immigrants—this campaign doesn’t distinguish between authorized and unauthorized. It arrests people based almost entirely on racial profiling. 

Anne Kim:  He’s also converting authorized immigrants into unauthorized ones by revoking temporary protected status, for instance, and threatening to revoke visas for others. 

Robert Shapiro:  Right. So we will continue to see some cost—push inflation from employment. Look, we’re still creating net new jobs—but at a significantly slower rate than last year. So we are seeing some impact on employment. 

There are very few things that virtually all economists agree on. The destructiveness of tariffs for both sides is one. It’s the only thing that Adam Smith and Karl Marx agreed on. The only thing that John Maynard Keynes and Friedrich Hayek agreed on. I certainly know that Adam Smith was a supporter of immigration. Why? Because growth equals increases in employment times productivity increases. That’s the formula. 

Smith, Keynes, Hayek, Marx, John Stuart Mill, Milton Friedman—all agreed on that. 

Anne Kim:  But not Trump. So I want to ask—as if we didn’t have enough nails in this coffin—about one more, and that is the independence of the Fed and the threats to it. Rob, you were a senior official in the Clinton administration. You've dealt with presidents and Fed officials. But have you ever seen anything like the threats Trump has leveled against Chairman Powell? 

Robert Shapiro:  No, we’ve never seen anything like this—except by Trump in his first term, when he attacked Janet Yellen, and later when he attacked Jerome Powell. 

Trump has this notion that if you cut interest rates, growth will increase. That’s true—unless you have significant inflationary pressures and a strong economy. Right now we have a weak economy. 

The first quarter contracted after growing at a 2.8% rate in the last quarter of the last administration. Biden may have gotten some things wrong, but he didn’t get the economy wrong. 

Under those conditions, no Fed chair who cares about their reputation would cut rates. What Trump is doing is making the Fed chair a poisoned chalice for whoever he nominates. The markets are going to assume the Fed won’t be independent. 

He’ll nominate a loyalist—maybe [Treasury Secretary Scott] Bessent, [National Economic Council Director] Kevin Hassett, or someone else we’re not even looking at. And the markets will assume that person won’t be independent.  

I think you’ll get a negative response to virtually anyone he names. You’ll see that response start to kick in as we approach the nomination. The markets will build in the expectation that policy will be inflationary. So even before the Fed does anything, there will be upward pressure on interest rates—and downward pressure on employment and incomes and growth. 

Anne Kim:  And that brings us back full circle—meaning that foreign investors will have one more reason to lose confidence in the US economy, which will have ripple effects throughout the economy. 

Robert Shapiro:  Right. It all feeds into the deficit—based pressures on interest rates and the economy. This is an economy that runs on credit. That’s why we’re big. That’s why we’re rich. 

Trump seems to believe that by force of will, he can mold reality. And that’s true in the response of the people around him. He governs by threat and intimidation. 

But it’s the responsibility of mature leadership to step back and say, “I have to govern in the interests of the country based on evidence.” That’s patriotism. 

That’s something Trump—and sadly, those around him—don’t seem to understand or care about. 

Anne Kim:  I have one final question: Do you think what’s going to happen with the U.S. economy is a slow downturn like a balloon losing air, or are we going to see a crash? 

Robert Shapiro:  It’s predictable in a general sense. Crashes require shocks. A shock destabilizes the economy because it’s not expected, and so individuals and businesses don’t prepare. A shock creates enormous uncertainty. 

The example I like is the difference between Lehman Brothers and General Motors. They both went bankrupt. One destabilized the global economy. The other didn’t—because we saw it coming and prepared. 

What I’ve been writing about is the potential shock from the difficulty of financing the deficit. If our big foreign lenders lose patience, or need to take a stand for their own political reasons, we could see something like 2008—2009. 

If not, then we get something like 1981—1982: a very serious recession, or a less serious one, followed by years of higher inflation and higher interest rates. 

It’s not only about the severity of the break, but the kind of economy we’ll have afterward. 

Anne Kim:  Well on that note, thank you, Rob, and we look forward to seeing you again. 

This transcript has been edited for brevity and clarity.  

** 

Anne Kim: 

Hey, Garrett it's great to see you. I hope you're having a good summer! 

Garrett Epps: 

Well, you know, Chief Justice Roberts used to say that when the court leaves town, the Constitution is safe for the summer. I'm afraid that's no longer true, but I'm trying to pretend it is. 

Anne Kim:

Well, the Supreme Court has had an extraordinarily busy few months, and they’re going to be busy for the foreseeable future. Just to list some of the rulings they’ve made recently: They've banned the use of so-called nationwide injunctions; they've allowed the deportation of eight immigrant men to South Sudan, which is a country to which these men have absolutely zero connection. They’ve upheld the Tennessee law denying gender-affirming care to transgender minors. And most recently, they’ve allowed not only the mass firing of workers to proceed, but they’ve allowed the dismantling of the Department of Education on a "temporary" basis as the cases proceed on the merits. 

When Supreme Court historians look back on this era, what do you think they’re going to say about the Court’s approach, its philosophy, its decision-making? 

Garrett Epps: 

Well, you know, that’s a hard question to answer because we are still in the midst of this. But the result seems to be that the institution is just paralyzed and is unable to function the way it has historically. And as I looked over this desert of unsigned emergency orders, I thought back to an article in the Monthly that we ran on our website by Jack Rakove, the leading historian of the Framing and the original period, who basically wrote that this is not a constitutional crisis because our constitution has failed definitively and we are now in the post-constitutional era.  

I certainly hope that's not true, but I do think that the signs and symptoms are there of a kind of institutional failure across the government. The American government with its structure and its constitutional norms is really like a patient with sepsis, that at a certain point the infection just overwhelms, and the organs begin to shut down. The lower federal courts have been continuing to function, but the Supreme Court has taken on itself to shut them down. 

This Court is ostentatiously unwilling to stand up in the slightest respect for the lower court judges who have been dealing with an administration that lies to them, that rather openly says that it will not follow their orders, that actually violates their orders and says, “What are you going to do about it?”  

Anne Kim: 

So do you think that the lower courts then are going to change their behavior as a result of these signals from the Court or do think the lower courts are just going to hold firm and do their job? 

Garrett Epps: 

This is beyond my powers of prognostication because it's actually a kind of psychological or political science prediction, not legal, right? I frankly think that for the lower courts, the law has been on their side most of the time.  

But do I think that things will stay the same? No, things never stay the same. And at a certain point, you know, a district judge is going to have to ask himself, do I just keep getting slapped down by the Supreme Court? Do I keep getting these threats? Is my family going to be in perpetual danger? Maybe I leave the bench. Maybe I just quiet down. I don't know. 

Federal judges are among the people in the world I most admire. I think they do a very difficult job. They're by and large very, very intelligent, principled people. But institutions break. We're seeing the Court break. At a certain point, the lower federal courts will not be able to stand up against this kind of pressure when the head of their branch is deliberately refusing to shield them. 

Anne Kim:  

Now, I want to ask you about the merits of a couple of places where the court has offered up some sort of reasoning and an opinion. But first, I want to point out a Blue Sky post by Georgetown's Steve Vladek. He said that since April 4th, and he posted this yesterday, the Supreme Court has issued 15 rulings on 17 emergency applications filed by Trump, and he notes that it has granted relief to Trump in all 15 rulings and written majority opinions in only three. So just to clarify for those who are not Supreme Court watchers, that is not normal behavior on behalf of the Court, right? 

Garrett Epps:  

Well, to start with, the government's got a streak that that Babe Ruth or Ted Williams would have envied. Vladek, as I recall in his book, The Shadow Docket, points out that in the Bush and Obama administrations combined, the federal government sought emergency relief in eight cases. That is over a 16 year period. This administration has sought emergency relief in 15 cases over a six month period and, as Vladek says, received it in every case.  

It is almost as if the Court has changed its function, that the Supreme Court is now a part of the executive branch whose job it is to police the lower courts, whose job it is to make sure the lower courts don't get in their way.  

As to why it's doing that, the mixture will be different for each justice. I think some of it is pure cowardice. The administration is signaling as hard as it can that it's not going to follow adverse rulings even from the Supreme Court. So you can convince yourself, if you're an institutionalist, that you're protecting the institution by not getting it into a situation where the executive just finally brushes it aside.  

Anne Kim: 

When we've had this conversation before, you’ve characterized John Roberts as an institutionalist. And you've said again just now that if the court has an institutionalist bent, it'll behave in a certain way. But what is the institutional justification for behaving in this way at the expense of other parts of its own branch? 

Garrett Epps: 

Well, you know, I think institutionalism and cowardice are very hard to tell apart. Institutionalism says we need to preserve the viability of this institution, and if we push ourselves too far out of our lane, we're going to end up harming ourselves and being brushed aside. And I do think that that features into the Chief Justice's reasoning at least.  

Now, the motives of the other five conservatives, I don't fully know. I don't think anybody really knows. It's a mixture of things. You've got three justices appointed by Trump, three justices who have made their peace with being Trump people, however many flashes of independence they may show. And so expecting them to throw themselves on hand grenades to stop changes in the federal government that they approve of may be a little too much. 

The other thing is just fear. One thing we don't know is what kind of back channel signaling is going on between the branches. There is a long history of that. And if you go back to the 1930s and 1940s and President Roosevelt and the Supreme Court, one thing we learned is that in 1935, the president was prepared to defy the Supreme Court in the gold standard cases. It's not clear whether the Court knew that or not, but they backed off in that case.  

And at the beginning of World War II, in a case called Ex Parte Quirin, the president had arrested Nazi saboteurs on American soil and tried them by military commission, which to a lot of people did not seem constitutional. But when that case came to the Supreme Court, when these saboteurs asked for a new trial, there's a lot of evidence that President Roosevelt sent an intermediary to tell the Chief Justice that if he ordered a new trial for the saboteurs, the president would execute them the next day. He was not going to follow any order of the Court.  

Now is something like that going on? I don't know. We certainly can't expect that Donald Trump is reticent--that he wouldn't do that. This is a man who came onto the floor of Congress and shook hands with the Chief Justice and said, “Thank you very much. I won't forget it,” speaking of the immunity ruling.  

And some of it could be physical fear. I don't really know, but this majority is behaving in a way that is shocking.  

Anne Kim:  

Let's move to individual cases. And I want to ask about one case that looked like a huge victory for the Trump administration on nationwide injunctions. But then the opinion by Justice Amy Coney Barrett seemed to allow a window for lower courts to use class action certifications to achieve close to the same effect as a nationwide injunction. How do you interpret what's going on? 

Garrett Epps: 

Well, you know, I don't want to make predictions. But I do think there has been a tendency on the part of this Court to say, “We can't give you relief in this case, but if you ask for it in a different way, then we might.” 

But it's not at all clear that they mean that. We have a case now coming out of New Hampshire where the judge has certified a nationwide class of babies who will be born after the deadline of the Trump citizenship proclamation. 

I think this is a classic candidate for a class. There are large numbers of potential plaintiffs, and the idea that each baby would have to go to court and have its own lawyer arguing that it's a citizen is ridiculous. The plaintiffs have one issue in common: Does the 14th Amendment guarantee birthright citizenship or not? And the representation is adequate. 

I'm quite sure there will be an emergency appeal to the Supreme Court asking the Court to decertify the class. And the question then becomes, did the Court mean what it said? This is a Court that doesn't have a very good record of meaning what it says anymore. 

Anne Kim: 

And just for context, what you're walking through are the four factors under Rule 23 of the Federal Rules of Civil Procedure under which a judge determines whether a class can be certified or not.  

Garrett Epps: 

Correct. Numerosity, commonality, adequacy of representation and similarity of issue. But at any rate, class actions are not a slam dunk. Courts are supposed to exercise some discretion or care in certifying them. And there are plenty of ways the Supreme Court could say, oh, well, maybe another class, but not this one. Meanwhile, of course, they are allowing this administration to attack in the most basic way newborn American children. And as Justice Sotomayor said in her dissent in the Casa case, what would they do if a future president said all people have to turn their guns in? 

The example she didn't use, but I think ought to be on everyone else's mind is, what would this Court do if an administration said, “All persons of the following ancestry shall report to transit points for internment?” 

That is no more unconstitutional than changing the rules about citizenship. That is no more sinister. That is no more anti-human. And would the Court say, “Well, you know, each individual will have to bring a lawsuit and say, no, don't send me to the camps, send the others, just not me.” That's not the way a legal system is supposed to work. 

Anne Kim:  

Justice Jackson also had a very powerful quote in her dissent in Casa where she said, “Executive lawlessness will flourish.” And to me, the word “will” seems to be a misnomer. It already is flourishing! 

Turning now to your point about just how conservative this Court actually is, some of the substantive rulings that have been issued will profoundly limit people's rights. One decision I want to ask you about is United States versus Skrmetti, which is the decision that upheld the Tennessee law banning gender-affirming treatment for transgender minors. A similarly conservative decision is Mahmoud v. Taylor. And that's the one that ruled that parents in Montgomery County, Maryland, have the right to opt their kids out of story time with books that happen to involve LGBTQ characters if they are religiously objecting to that content. What do you make of these decisions? 

Garrett Epps: 

Look at the two cases together, and both of them have to do with parental rights and the parents' rights to care for the upbringing of their children. Skrmetti says that even if a physician and the parents agree that a child is suffering from a recognized disorder, gender dysphoria, and that these treatments would help prevent a bad outcome in this particular case, parents are not permitted to make that choice because the Tennessee legislature thinks they would do better not to. On the other hand, when you have a local school board that thinks it would be good for students to be exposed to literature that is inclusive, then parents of course have the right to say, “No, no, no, that mustn't be allowed.”  

So there's a tremendous contradiction between the two.  

An equally important thing about Skrmetti is the way that the Court dodges the issue. You or I would say this is a case about trans rights and the extent to which trans people, in this case, minors, but not just minors, are entitled to have their uniqueness, their physical integrity, their freedom of choice protected by the Constitution from a fairly aggressive intervention by the states. And the Court gets around that by adopting this transparently dishonest argument that the Tennessee statute is not an anti-trans statute at all but instead discriminates against certain medical procedures and treats both genders the same.  

I don't know if people remember Loving v. Virginia, but the Commonwealth of Virginia argued to the Supreme Court that it didn’t discriminate by race because the law said white people can't marry Black people and Black people can't marry white people. So it's perfectly equal, no harm, no foul. The Court said that's a ridiculous argument. But now the Court has picked that argument up 50 years later saying we can make trans people disappear because they're not really a rights-bearing class of people, and this is simply a sort of medical regulation. That's a very ominous sign.  

Anne Kim: 

Okay, so let's move to next term. The Court can't dodge the substantive questions for that much longer. Birthright citizenship will come up on the merits. The president's ability to levy tariffs randomly, the president's ability to use the Alien Enemies Act to send people out of the country randomly - all of that is going to come up.  

I know you don’t like to predict, but any thoughts?  

Garrett Epps: 

Well, I have spent a lot of the last few weeks re-examining my life choices and thinking that I could have pursued a career in used car sales, for example, or some other profession that has some shred of integrity to it. 

And so for that reason, I'm very reluctant to predict what the Court will do. Now, I'm going to note that a lot of the very smart colleagues that I have in the professoriate, people much smarter than me, people who know, you know, have been on the inside of the court as clerks or lawyers, are quite confident that the court will not approve Trump's démarche on birthright citizenship, which is just the most flagrant piece of lawlessness we've almost ever seen. I would like to believe that.  

But things are changing very fast. And I am reluctant to predict with confidence that the Court will make the administration back off on citizenship when they've already allowed it to go into effect. We'll know more when we see what they do with the class certification. But I think that is the case that will determine whether we are now in a state of just nihilism constitutionally. If the Court can find some way to allow Trump to do this, there really is nothing that Trump won't be able to do.  

We don't know what's going to happen. We don't know why the court is doing what it's doing. And remember, we're dealing with a six member majority, a multi-headed beast, and it's very hard to say which way the beast will run when we ring the bell or whatever else.  

And I think that the degree to which the administration is stepping up its pressure on the public and on institutions -- conducting mass immigration raids and things of this sort-- is just raising the temperature and putting more pressure on a Court that has really shown very little ability to do what we all were taught in high school the Court would do, which is to use its independence to stand outside of the political gale and decide based on neutral principles.  

The way we talk about things is changing constantly under the pressure of this administration. And just to take one example that seems absurd, in the last week, we've had the president say that he objects to the affect of a certain comic actor and therefore is going to deprive her of her American citizenship. If you said 90 days ago, “Can the president object to the presence of someone on television and therefore take away their citizenship?” The person would be like, “What are you, nuts?” Now we're arguing that Trump's power over citizenship doesn't extend that far, whereas in fact, the president has no power over citizenship. That’s how far the Overton window has shifted.  

What this illustrates to me is a proverb that was coined by Samuel Johnson in the 18th century where he said we “succumb to absurdity as the eye in time is accommodated to darkness.” And we're seeing that darkness is growing. The eyes of everybody, including the Supreme Court justices, are accommodating to the kind of things that Trump is doing. 

Staying out of certain fights to preserve the institution is a very easy thing to say. But a Court that cannot look at rampant lawlessness and call it by what it is isn't really a court anymore. The Supreme Court will have a very different role in our government going forward unless something drastically changes.  

I was also reminded this week of a quote from Looking Back at the Spanish War by George Orwell, a very great essayist, who said, talking about the fall of the Spanish Republic, he said, “I think it is better, even from the point of view of survival, to fight and be conquered than to surrender without fighting.” A court that draws lines and says to the administration, “If you're going to cross these lines, we're not going to help you,” is a very different historical legacy from a Court that enables, that helps, that steps out of the way, that seems to be bending the knee to these same lawless initiatives.  

Anne Kim: 

Thank you, Garrett. Always a pleasure to talk to you, even in these dark times and look forward to having a conversation again soon. 

You can subscribe on iTunes, Spotify, and YouTube

Below is a transcript of their conversation, lightly edited for clarity:

Anne Kim: Hey, Michael, welcome to the show and congratulations on your book. It's great to have you. 

Michael Grunwald: Thanks so much for having me. I'm such a Washington Monthly fan. This is very cool. 

Anne Kim: Thank you. Well, the first question we have is about the title of your book. You've titled it We Are Eating the Earth. What exactly do you mean by that? 

Michael Grunwald: The short answer is agriculture is eating the earth. Two of every five acres of habitable land on this planet are now cropped or grazed. Just by contrast, you hear so much about urban sprawl. Well, one of every hundred acres are cities or suburbs. So really this natural planet has become an agricultural planet. We're losing a soccer field worth of tropical forest to agriculture every six seconds. 

So really, you know, that's a disaster for deforestation, for biodiversity loss, for pollution and water shortages, but it's also a disaster for the climate because those trees and wetlands and prairies that we're destroying used to store a lot of carbon and they also used to absorb the carbon that we've already pumped into the atmosphere. So I always say that trying to decarbonize the planet while you're continuing to vaporize trees, it's like trying to clean your house while you're smashing the vacuum cleaner to bits in the living room. You're making a mess and you're also crippling your ability to clean up the mess. And so that's really what the book is about. 

Anne Kim: And most of us aren't farmers, we're eaters. Can you drill down a little bit about the specific practices that are having the devastating impacts you're talking about?  

Michael Grunwald: I think for a lot of us, we kind of take a cross-country flight and we see all those squares and circles out the window and kind of say like, wow, there's a lot of agriculture out there. But it's flyover country to us, right? We don't live it that much. part of the, so yes, there are certainly, there are diesel tractors and crop dusters that create a lot of carbon dioxide. You’ve probably heard about the cows burping and farting and that creates methane and fertilizer creates nitrous oxide. But really the biggest problem with farming is just the fact that it uses so much land. We're talking about 12 billion acres of the planet and it's on track to use another 12 Californias worth of land by 2050 if we don't change some stuff. 

So essentially, you know, we need to make more food with less land. That means that more efficient farming, which we actually do have in the United States, can be less, less devastating to the environment than the kind of inefficient farming where you just, you know, cut down many acres of of Amazon and put a few cows on it. 

Bill Scher: So when you talk about cows, that puts you on a glide path to the beef debate, right? And I don't come into this with any kind of set position, just like the average American, want to eat my beef. Is there any, the book argues that beef production is just an enormous land suck. Is there any way to sustainably produce beef? If you're getting beef from a local family farmer, is that better than from a big agribusiness company? Or is it just so completely inefficient that there's no justification for it? 

Michael Grunwald: Well, beef is bad. So, you know, if the best thing you can do for your personal climate footprint is to eat less beef, that is true. But just like Willie Sutton, you know, he said that he robbed banks because that's where the money is. It is true that if you if you care about emissions, you got to care about better beef, because that's where the emissions are. Now, unfortunately. 

Better beef is generally not the kind of local grass-fed, know, organic, twee beef that you can get at the farmers market. You know, that's usually worse for the planet and the climate because it uses more land and it also because it takes the cows longer to get to slaughter weight, they're alive longer to burp and fart methane. Really, but I went to Brazil and I saw incredibly efficient beef ranches where they had improved pastures where that had gone from maybe one cow on every five acres to one cow per acre. And that meant they were using one fifth as much of the Amazon. So yeah, mean, even though that beef was then going to a feedlot that a lot of people might not like, and even though they were fertilizing their pastures in a way that Michael Pollan might not approve. 

Anne Kim: So yeah, I read that chapter about Fazenda Tropical. That was just really interesting. Why don't ranchers in Montana, you know, adopt those same kind of techniques? Like, what is it about American beef, the American beef industry that makes it difficult to adopt those kinds of models? 

Michael Grunwald:  Well, American beef is pretty good. The main character of my book definitely bangs his spoon on his high chair about how beef is terrible. He's often then asked, “Well, then what should American beef producers produce?” And he's like, “Beef.”  American beef is five times more efficient than the beef produced in Africa, it's using one fifth as much of the forest. And that's really important. Beef right now generally worldwide is about 10 times worse than chicken and pork in terms of emissions, in terms of land use, if it was only like three or four times worse, that would make a huge difference. So, I've cut out beef in my own diet, beef and lamb. 

Going vegan is the best thing you can do for the climate and for the planet for your diet, but I'm weak and I'm a hypocrite. But it turns out that just cutting out beef and lamb is about as good as going vegetarian because vegetarians tend to eat more dairy and again cows are bad.  It's less bad when they're making dairy because they make milk like several times a day while they only make beef like once in their lifetime. So that's why beef is so extraordinarily bad. But again, everybody kind of finds the level of hypocrisy that they're comfortable with. I do think there are a lot of things you can do to reduce your impact, but just a little less beef, even if you replace it with chicken or pork, that's probably the best thing you can do. 

Anne Kim: Now what about Beyond Burgers and Impossible Burgers - fake meat? You had a chapter on that and there's kind of this cautionary tale on just how hard it is to replace beef. 

Michael Grunwald: Yeah, well, that's definitely one theme of the book is that I look at really dozens of kind of promising, I think, exciting solutions. But the fact is none of them really have a lot of traction yet. And all of them are going to be really hard because, right, we've been we've been eating meat for, know, our ancestors started two million years ago. We actually evolved to  enjoy the taste of meat. When we started eating meat, we started getting bigger brains and smaller stomachs. And it's definitely a part of who we are.  

The long story short is that back in 2019, after Beyond went public and was suddenly worth a third as much as Tyson, people thought it was going to take over the world. It was like extraordinary excitement. I actually started reporting this book at the Good Food Institute conference in 2019. That's the kind of coming together of all the different fake meat companies, whether it's plant-based or cell-based or fungi-based, everybody's there. And they were talking about whether they were gonna replace the meat industry in 15 or 20 years. My joke was that I thought I was gonna accidentally raise a Series A round in the drinks line.  

I finished my reporting at the same conference in 2023 and it was doom and gloom. Beyond has gone from $250 a share to $2 a share. Everybody's like, oh, it was a fad. It's never going to work. And my feeling is like, well, it was better than the old hockey puck veggie burgers that vegans used to eat, but it's not yet as good as meat. And until it gets as tasty and as cheap as meat, it's going to really struggle in the marketplace because most people aren't writing books about food and climate. So they're not going to give up beef for the sake of the planet. That said, think humans are not so good at making sacrifices for the planet and not so good at being nice to each other. But we're really good at innovation and inventing stuff. And I think fake meat can still get better and cheaper and healthier. So I expect people will keep trying. 

Anne Kim: It probably doesn't help to call it fake meat. It probably needs some sort of other label on it. 

Michael Grunwald: Yes, yes, the industry likes me, except when I use the phrase “fake meat,” and then they all yell at me and I'm not supposed to call it “cell based meat” either. It's “cultivated meat,” right? Sometimes people call it “lab grown meat.” That's like very bad. Do not call it that. Stephen Colbert once called it “shmeat.” I don't think I don't think that went over big. 

And some of this is going to be some of this definitely is going to be about selling it. You don't want what happened with GMOs to happen with with meat substitutes where even before it came out people were like, that's gross. It's frankenfood. But the Tesla example shows that if you make a good product at a competitive price, some people will buy it. 

And look, I had an Impossible sausage at Starbucks this morning and it's really good. Plant-based nuggets now in blind taste tests, they pretty much outcompete chicken-based nuggets. I mean, who the hell even knows what's in a chicken nugget anyway, right? And they're mostly just vehicles for sauce. So it shows that it can be done.  

Bill Scher:Now you get into GMOs in the book. I mean, a lot of the book is diving into these incredibly controversial subjects that even can divide people within progressive circles. And I'm not, I'm not planting my flag anywhere here. I'm just asking questions. But, know, GMOs definitely took a big hit from the left but they're still in the food supply and they're not talked about as much. There's kind of quietly in there. And I just want to get your general take. Is this considered generally a good or bad thing? Is it helping the climate? Is it hurting us in other ways? What's your overall view? 

Michael Grunwald: I mean, GMOs are fine, right? They're not unhealthy. They just aren't. They're like the most studied substance on earth, and there's no evidence of any health problems from eating that stuff. Now, I do talk about in the book how some of the yield benefits of GMOs have been exaggerated by their fans. So far, while some GMOs, particularly the ones that have the kind of natural insecticide,  so that you don't have to apply as much insecticide. Those have been really helpful for the environment, as well as yields, particularly in places like India, where they don't have as many pesticides. But in general, think they have not always lived up to the hype. But I'm very excited about the idea of gene editing, which is much more precise and should be even less dangerous, not that GMOs are dangerous at all.  

Anne Kim: I feel like your book is going to be a revelation for a lot of people who care the most about the climate, because these are also the people who read Michael Pollan and are part of the “slow food” movement, organic and all of that. Some of the practices that you write about that people who care about the climate embrace are also actually the most damaging for the planet, right? 

Michael Grunwald: Yeah, I mean, like Michael Pollan is a beautiful writer. And that's kind of a problem. I think a lot of people believe some wrong things because because he's explained them so beautifully.  I did an event in Berkeley where I debated a kind of professor of agroecology who is kind of pushing for kind of a global transition to no chemical, organic, low yield farming that in my opinion would be a real disaster for the planet and the climate. It was funny, Alice Waters, the famous chef from Chez Panisse, she was sitting in the third row, just glaring at me the whole time. It was like a room full of 200 Michael Pollan readers and they were out to hate me. But it was actually the response was mostly really great. The Paul Newman's daughter who now runs Newman's Own Organic came up and said like  exactly what you said, that that was revelatory.  

I think a lot of people, they see industrial agriculture and they are understandably upset. It treats people badly. It treats animals badly. It makes a huge mess. It's like all the fertilizers are creating that dead zone the size of Connecticut and the Gulf of Mexico. They use too many antibiotics, which is a public health disaster. Their politics really suck. Right? They're always lobbying against regulation just for the environment, for the climate. So people hate them. And there's this sense that, the kind of Michael Pollan rustic bucolic farms with red barns where the animals had names instead of numbers and the soil was treated with love and the farmers looked like American Gothic --  that that kind of good, natural, kinder and gentler farming was good for the environment.  

But the fact is that the real environmental tragedy was the transformation of the prairie or the forest or the wetlands into those nice Michael Pollan farms. That's when you lost the carbon. That's when you lost the biodiversity. And there was an additional cost to the intensification. But really, it's those low yield farms just creating agriculture in the first place where you make the big mess. And the thing about low yield agriculture is if you're making less food per acre. 

You need more acres to produce food. And that is the simple idea behind “we are eating the earth.” We're going to need 50 percent more calories by 2050. And we can't keep tearing down land. You can't keep using more land.  

You see what happened in Sri Lanka where they banned agrochemicals, they banned fertilizers, they banned pesticides, they went all organic. And within a few months, their farm yields crashed. They were no longer self-sufficient with rice. They started having food shortages and food riots. The government fell and they changed their mind because it was a bad idea.  

I do think the kind of like there's the left wing and now on the right wing with Bobby Kennedy and and Joe Rogan. There's this notion that farming and food should be natural, but nobody really knows exactly what that is. And I think farming should be productive so it doesn't have to cover as much of the earth. 

Anne Kim: I want to ask about one more sacred cow or rather in this case, sacred corn. And that is biofuels. You have just an amazing takedown of the biofuels industry and this mythology that has risen around biofuels as the key to solving climate change while allowing us to keep our gas cars and that kind of thing. I remember when ethanol was a thing back in the day. So can you tell us a little bit about biofuels and why biofuels are actually super bad.  

Michael Grunwald: Well, it's still the thing. It's 10 percent of your gasoline. And yeah, I mean, right. Biofuels sound good. It's like plant based fuels, farm grown fuels. But, you know, in general, you kind of plants are good when they're plants and not so good when you're burning the plants.  

And essentially, biofuels, first of all, they were seen as climate salvation because at the time in the early 2000s, there really were no other alternatives to fossil fuels. Solar and wind just weren't a thing. There were no electric cars. So people were coming out and saying like, this is going to replace fossil fuels. And it's great because when you you burn the corn in your engine and it comes out the tailpipe and that goes into the sky, but then you grow the corn in your field and that soaks up the carbon. So it's great. It's just a win-win. And then the hero of my story, Tim Searchinger, who was at the time just a wetlands lawyer, was like, but wait a minute, those fields are already growing corn. And if you grow fuel instead of food, then you're gonna have to grow more food somewhere else. And it's probably not gonna be a parking lot. It's gonna be a forest or a wetland.  

The punch line is that the climate analyses of biofuels and really everything else were ignoring land. And when you took into account the land use, the indirect land use change that these biofuels were going to induce, that really biofuels were twice as bad as gasoline for the climate.  

Anne Kim: Well, okay, so corn is not the miracle plant we thought it was gonna be, but you do write about a miracle plant. That seems pretty cool. It's a plant I had never heard of – pongamia. What the heck is pongamia, and why is it so good, and why aren't we all eating pongamia burgers or butters? 

Michael Grunwald: It's kind of another cautionary tale about how hard it is to make this stuff work. Because Pongamia really is a miracle tree. It's a super tree. It grows, you know, in horrible land without irrigation, without fertilizer, without pesticides. It's got sort of natural pesticides. And it's essentially it's like vertical soy. 

It grows something that's very similar to a soybean. It's got the protein meal and it's also got the oil. But it's a tree, so it grows a lot more of it. And it also stores carbon because it's a tree and you can see it above the ground. You can see all that carbon. So it really is awesome. I tell the story of this company called Terviva, which first their problem was like, this stuff is amazing. 

But it's been really hard and it's hard to get farmers to plant it. It's hard to, you know, get food companies to use it. He's now like 15 years into the experiment. It's only on 1500 acres, and there’s one protein bar that used it. He's got some deals to sell Pongamia oil for biofuels, which is certainly better than corn ethanol, but it's not what he had hoped. So again, it's another example of how these problems are really big and really hard to solve, even with the miracle tree. 

Bill Scher: Can you pinpoint what the obstacle is? Is it just a marketing problem or is there some other thing that's more systemic? 

Michael Grunwald:  It is really hard competing with the Cargills and Archer Daniels Midlands of the world, who just have these massive volumes and tiny margins. 

It's really hard to make food and agriculture work and farmers are very set in their ways. It's very hard to get them to do something different, especially to grow a tree that takes four years before the first crop comes out. And then, you know, and then other people are going to wait and see if this stuff actually works and if there's a market for it. So the, you know, change just seems to come very slowly in this entire space.  

Anne Kim: So Michael, final question for you. A lot of things that you write about are systemic, things that us as ordinary eaters can't do very much about. But there are things you write about that ordinary people can do, and one of them is the shift in diet. You've talked about that. But what else can people do? Maybe if you can talk a little bit about food waste, maybe as something that we do have control over on an individual level that could make a difference. 

Michael Grunwald: There are a million things that people can do to reduce the impact of their diets. But I try not to weigh people down with so many. And it's really eat less beef and waste less food. We talked a little bit about how beef is so much worse than other forms of meat. When you waste food, you waste all the farmland and the fertilizer and the water that went into growing that food. And globally, we waste about a quarter of our food. We use a landmass the size of China to grow garbage. The average American family wastes about $1,500 a year on food that never makes it to their stomachs.  

Even during this time of food inflation, Americans are not wasting less food, which is kind of crazy when you think about it, right? We're super mad about how much we're spending on food and yet we're still throwing out probably in households in America about a third of it. So yeah, mean, there are things individuals can do in terms of planning your meals better, smaller portions, that kind of thing.  

But again, I don't want to put too much hope in like people doing the right thing because behavioral change is really hard. And then in a lot of the developing world, it's not so much food waste, you know, in the home or near the fork. It's more near the farm with primitive harvesting equipment and, you know, bad storage and bad roads that make it hard to get food to market and no cold storage and structural change is hard too.  

Anne Kim: Yeah. Well, Michael, thank you for joining us and please tell everyone where we can find your book. 

Michael Grunwald: Well, it's hopefully in bookstores and get it on Amazon and Barnes and Noble or your local independent. And I do want to give a shout out to the Monthly because they tell you when you write a book that you need to have a tribe. 

And of course, I've pissed off all the tribes in various ways, the vegans, you know, the foodies, the hippies, you know, the Aggies, you know, the Michael Pollan readers, the, you know, everybody's mad at me. But in a way, like like my tribe is the Washington Monthly, like people who care about people who care about sort of dorky policies that are really important that, you know, haven't been sexy to everybody else. But, you know, everybody lives on the planet and everybody eats. 

And so for people who care about like, you know, how to solve problems, which is like basically the whole monthly thing, you know, that's that's my tribe. 

Anne Kim: Well, thank you very much, Michael.

In this episode, University of Oregon political science professor Alison Gash, one of the nation's foremost authorities on marriage equality, describes the nature of the conservative assault on LGBTQ Americans and how to fight back. She also discusses how the Supreme Court's ruling in Dobbs, which overturned Roe v. Wade, has opened the door to walking back protections for same-sex marriage.

Cohosts: Anne Kim and Garrett Epps.

Below is a transcript of the conversation, lightly edited for clarity:

Anne Kim: Okay, so Trump has opened up a new front in his war against higher education just last week, and that's to limit international students coming to the country, particularly at Harvard University. Can you catch us up on his latest moves on this front?

Robert Kelchen: We're almost out of fronts in the higher ed wars. The only front that's even kind of remaining right now is financial aid going directly to students, and that front may be opening next through actions taken against Columbia University's accreditor.

For international students, the actions taken have included a pause on visa interviews, significant delays in visas even more than normal, attempts to completely stop all visa processing for Harvard, and potential additional social media scrutiny. On top of that, there was a limited travel ban put in place that affects individuals coming from about a dozen countries, most notably Iran, which is a relative powerhouse in PhD admissions—even though it's only about 12,000 students as a whole across the country. So there's a lot going on once again.

Garrett Epps: We talk about international students as a generic term, but there's a fairly complex set of backgrounds. I gather there were about 1.1 million international students last school year. Who are they? Can you lay that out for us?

Robert Kelchen: It's a mix of undergraduate and graduate students coming from many different countries across the world. The two biggest countries, representing roughly half of all enrollment, are China and India. Enrollment from China has been volatile in the past with the Trump administration's policies the first time around.

Enrollment from China is particularly politically interesting right now because the Trump administration has stated that they want to keep everyone who's connected to the Chinese Communist Party out of the US. But that's also how individuals get into the US—through connections. That's how they get the ability to go. The Chinese government's pretty upset about this, and that's one of the factors continuing this trade war.

Anne Kim: These Chinese students aren't all just going to Harvard and Columbia, right? They're diffused across the country—there are state schools that rely on international students and Chinese students as well?

Robert Kelchen: Yeah, they are all over the country because there are very good universities all over the country. Even for some of our regional public institutions, they're enrolling substantial shares of international students. Some of it's by word of mouth, and some of it's because institutions in bigger cities have international populations and attract international students as well.

Anne Kim: Can you give us a few examples of regional public schools or state schools that maybe some of us wouldn't automatically think of as heavily reliant on international students?

Robert Kelchen: I think of a place like the City University of New York, where they enroll quite a few international students because it's New York City—there's just a lot more comfort there. But even in smaller regional public institutions, like the University of Central Missouri, they've historically enrolled a couple hundred international students, many of them from India. There's a pipeline there that's helping to diversify the student body and also helping to stabilize the budget.

Garrett Epps: There's an economic impact beyond the direct impact to institutions. I live in a college town with a state university and significant international student population. Studies suggest that international students themselves support as many as 400,000 jobs in this country. What will the overall economic impact be if there's a real interruption in the flow?

Robert Kelchen: It would hurt local economies, especially outside the biggest cities. Several countries like Australia, Canada, and to some extent the UK have limited international student enrollment because they're concerned about effects on housing prices by importing large numbers of students. That's a lesser concern in the US because our overall international student population is about five to six percent of overall enrollment, but they do help fill up apartments. They eat, some of them work, they have cars—they drive economic activity. In an era where enrollment in higher education is generally flat or down, that's an important source of students for colleges and their communities.

Anne Kim: One of the ironies is that Donald Trump is very obsessed with the trade deficit, and education exports—which is basically what this is when an international student comes to the United States—are one of the few areas where the United States actually has a trade surplus. We had a $43 billion trade surplus in education exports in 2024. One consequence of this ban on international students is it's going to worsen the trade deficit.

Robert Kelchen: It absolutely will. But even going beyond the direct economics, we are exposing people to the American way of life, the American way of doing things. We're exporting soft power. That has been extremely helpful around the world, helping to shape the development of much of the world. We think about what's happened in Latin America and Africa—we've educated elites from those countries for decades and exported American capitalism instead of the Russian or Chinese way of doing things. So it helps with the trade deficit and also makes people more comfortable with America. Hopefully they'll buy more of our stuff because they're comfortable with America, and if we've done a good job, they're making more money back home.

Anne Kim: Going back to the direct impacts on universities—can Harvard actually survive losing all of its international students? What's going to be the impact on a place like Central Missouri as far as their survival and viability?

Robert Kelchen: Harvard plays by a different set of rules than most of American higher ed and they're being targeted in a different way. If the international student pipeline just gets shut off, Harvard can't replace everyone immediately, especially if returning students are affected, but over time they could enroll a class that's 100 percent American or at least 100 percent non-Chinese. They may not get quite as much in tuition revenue, but their bigger concerns are: are they able to be that global engine? And are they able to do as quality education at the graduate level? In a lot of our STEM fields, we have masters and PhD students from other countries who then teach our students as well.

At the end of the day, Harvard and the Ivy Leagues are going to be okay. It's the regional public institutions and smaller privates where they're not going to be able to replace those students because there aren't enough American students to go around to fill a 1.1 million student gap. With all the cuts to research funding, the big public research universities are going to try to expand enrollment. They have the market power to do it, but it further stretches the regional institutions who may both lose their international students and lose domestic students who have the chance to go somewhere more selective.

Garrett Epps: The administration claims there's an issue of fairness in bringing international students in because they take up spots at a place like Harvard that should go to Americans. How do you assess that argument?

Robert Kelchen: Harvard is unlikely to expand its capacity in any meaningful way because it's so expensive to add a new residential college, and I don't think the locals in Cambridge would allow a big expansion. So yeah, for a few institutions, it is a zero-sum game, but for most of American higher education, we do not have capacity issues. If anything, the research backs this up—by bringing in a lot of full-price paying international students, that allows institutions to expand their capacity to hire more people, serve more American students, and offer financial aid.

But in the eyes of the administration, the Ivy Leagues are higher education. Even though they bash the Ivy Leagues, that's where many of them went to school—that's all they think about. They might throw in a reference to NYU every once in a while because I think one of the Trumps goes there.

Anne Kim: The tuition being paid by international students subsidizes middle class and lower income students, right? If you open up the slots available at Harvard for those students, it's not likely that a low income student—especially at a regional public college—there may be less financial aid when you don't have the tuition dollars available to subsidize it.

Robert Kelchen: Yes, the regional schools and even public big universities don't have enormous financial aid budgets. The way they get money is through out-of-state, but especially international students, because they're the ones who pay full price. There aren't a lot of American students who pay full price at the undergraduate level.

Garrett Epps: The AAUP study said that the number of international students was already beginning to fall. Between March 2024 and March 2025, it fell by four or five percent. How extreme is the decline likely to be?

Robert Kelchen: At this point, I think anything between 10 percent and 100 percent is on the table. This is the biggest challenge, not just for college leaders, but for anyone in university communities. If you're running an apartment complex, you don't know how many people you're going to have. That's a problem. We could see a range of outcomes from pretty much the status quo to them dragging their feet on any visas so nobody international can study in the US. Both are very possible. We're sitting here only six to eight weeks away from students needing to move to the US to get ready for the fall term, and we have absolutely no idea what could happen.

Anne Kim: Robert, you've done groundbreaking research on school closures, particularly around small private college closures. How is that population of colleges going to come out in all of this? Are there particular types of colleges you see as particularly vulnerable to the combination of financial pressures now bearing down on higher education?

Robert Kelchen: Assuming no changes to financial aid for students, the way most smaller private and public colleges are affected is through increased competition for students. Most of these institutions don't have a lot of international students. If there are 500 students struggling to make ends meet, they likely don't have an international market for their institution. They may be paying some broker to try to get international students, but they're paying that broker so much money, they're not getting a lot of tuition revenue out of it.

So they're affected more by what happens farther up the prestige chain. If the big public research universities try to expand their enrollment, they may poach from the regional publics. The regional publics try, then community colleges or these really small struggling privates—their students start to get sucked up as well. But I think the bigger concern for colleges on the brink of closure is what happens to financial aid. Does that get out to students on time? If not, can colleges make payroll? That's what I'm concerned about for that sector come August.

Garrett Epps: It's been perceived in the opinion journalism sphere that Americans in general have begun to sour on higher education, that the image of institutions are in trouble. Do you think any of Trump's critique of higher education is valid? Anything that they need to walk away from this episode determined to reform?

Robert Kelchen: I don't know if there's really the ability to do much reform with the second administration here. The first Trump administration, I think they were more open to reform. But here, I think there's more of a mindset of "this is what we want to do."

Conversely, we'll see if we end up with a new secretary of education soon because Linda McMahon just said to Bloomberg, "I think there's such merit in having international students be a part of our university populations. Culturally, it's very beneficial."

Anne Kim: Whoops.

Garrett Epps: She didn't get the memo.

Robert Kelchen: But I think it also highlights the divide between different wings of the Republican Party. There's the wing that is anti-immigrant in any way, and then there's the more traditional pro-business wing that is perfectly happy with immigration. It's kind of the debate fallout with Elon Musk versus Steve Bannon, where they represent different wings of the party.

Anne Kim: What options do universities have to weather this particular storm? Do enough colleges have endowment dollars that aren't already spoken for that they can draw down on as a rainy day fund? What options do universities have to get through this?

Robert Kelchen: The easiest option is budget cuts because that's something they can readily control. It's painful, especially this late in the game thinking about fall. But most institutions either have budget cuts planned or contingency plans out there. Even at the red state public universities, publicly they're saying everything's okay, but privately, they're also thinking about what budget cuts look like.

Endowments can be helpful for a small number of institutions, but most institutions have relatively small endowments on a per-student basis. Even for the Harvards of the world, 70 to 80 percent of their endowment funds are restricted for particular purposes, like very narrow student scholarships or supporting faculty in particular disciplines. Given how the Ivies operate like hedge funds, they can't go out and sell a lot of their assets right now because they're tied up in a million acres of land in Brazil or other alternative investments, which means they can't get all the cash right now.

These big endowment colleges are also worried about the possibility of an endowment tax that could take away quite a bit of their earnings and make it less attractive for donors to give money. All financial hands are on deck right now, but the easiest thing to do is cut and then maybe see if you can use any other funds you have between the couch cushions to get through right now.

Garrett Epps: The big bill has some changes to endowment taxation. What are they and how would they play out?

Robert Kelchen: There are a couple of big changes. First is taking the tax rate that was 1.4 percent in 2017 up to as much as 21 percent. There have also been proposals to get rid of the tax-preferred status for donations—that's not in the bill, but I believe that's another thing the administration has talked about. The biggest thing really is just the tax rate going up so much.

Anne Kim: Just to clarify, the tax rate would be on investment income earnings rather than the corpus of the endowment, right?

Robert Kelchen: Yes, which also gives institutions an incentive to put their money someplace that doesn't generate earnings right away.

Anne Kim: Right. So liquidity is going to be a gigantic problem for a lot of institutions come this fall and going forward. Well, thank you Robert for keeping an eye on this. I'm sure we'll be back to you very soon with another update on what's happening, and hopefully the news will be better.

You can subscribe on iTunes, Spotify, and Youtube.

You can subscribe on iTunes, Spotify, and Youtube.